Reform might lie the future for a piece of banking legislation passed last year that calls for nation-wide registration of mortgage originators.
The Federal Reserve, US Treasury Department, Federal Deposit Insurance Corp., National Credit Union Administration and Farm Credit Administration jointly proposed rules amending the Secure and Fair Enforcement for Mortgage Licensing Act of '08 (or SAFE Act).
The act, signed in July of '08, sets up procedures and standards for developing a mandatory mortgage loan originator registration, and Monday's proposed rules set stricter registration regulations on the originating institutions.
In other words: If the SAFE Act was a suggestion, the new proposal would be an enforcement.
The SAFE Act requires mortgage loan originations to register with the Nationwide Mortgage Lending System and Registry (the Registry). In the process, originators supply to the Registry background information and fingerprints for a background check. The act also "generally prohibits" employees of an agency-regulated institution from originating residential mortgages without registering, the regulators said in a joint statement Monday.
The new proposal goes further into the process, establishing regulation requirements for mortgage loan originators employed by these institutions. The proposal also requires the institutions themselves to adopt policies and procedures to enforce compliance with the SAFE Act.
The proposal, as part of the efforts for more comprehensive enforcement of the act, requires originators to obtain a unique identifier through the Registry. These permanent identifiers are designed to help consumers educate themselves about the employment history and background of any particular originator before obtaining a residential mortgage through them.
It's the latest step in a broad effort for reform and transparency by banking regulators. The proposal now goes to the Federal Register, where it will be open to public comment for 30 days.
Write toDiana Golobay.
Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.

This month inHousingWire magazine

Each Vanguard excels in a wide range of skill sets but all share one common trait: the ability to lead, motivate and inspire their employees. Each of them are more than capable leaders that utilize their resources to solve problems, create solutions and drive innovation in their respective areas in the industry.

Feature

The next step to the advancement of digital mortgages lies with utilization of blockchain technology. This nascent technology will take all these measures and truly transform the industry from paper to digital, resulting in transparency, better data security and higher revenues from operational efficiencies.

Commentary

Housing affordability is a crucial ingredient in any thriving community. And yet, in cities and towns across the country, there is a growing recognition that truly “sustainable communities” can be created only when multiple forces come into play. The cost of a home is only one of those factors.